by Phil Galewitz, Kaiser Health

by Phil Galewitz, Kaiser Health

JACKSON, Miss. -- Gov. Phil Bryant and Insurance Commissioner Mike Chaney have known each other for 30 years and call themselves friends.

Now, a wedge has come between the two elected Republicans: President Obama's health care law.

Bryant is trying to stop Chaney from creating a critical element of the Affordable Care Act - an online health insurance marketplace. Starting in October, it will allow an estimated 250,000 Mississippi residents to shop for coverage and learn whether they qualify for government subsidies or Medicaid, the state-federal health care program for the poor.

Their dispute in a state whose population is among the nation's poorest and least healthy is an example of the growing split among Republicans over whether to continue resisting the controversial law.

Two months ago, Republican opposition was virtually uniform across the country. But cracks are appearing and they will widen, predicts Larry Jacobs, director of the Center for the Study of Politics and Governance at the University of Minnesota. "The arc of partisan fever is beginning to recede, and pragmatism is beginning to come to the fore," he says.

Arizona Gov. Jan Brewer, one of the most vocal opponents of the health care law, shocked the GOP-controlled Legislature on Jan. 14 when she backed the law's optional Medicaid expansion. Brewer became the fourth Republican governor and 23rd overall to embrace extending Medicaid to cover everyone earning up to 138% of the federal poverty threshold ($32,000 for a family of four). The other GOP states are Nevada, New Mexico and North Dakota.

Most states are expected to decide by late spring whether they will expand the program. As many as 17 million people would become eligible for Medicaid if all states participate.

Mississippi was one of four Republican states and 17 overall that applied to the federal government in December to establish a state insurance marketplace, or exchange. The other GOP states were Utah, Idaho and Nevada. States that don't set up an exchange will have one set up by the federal government.

Because of Bryant's opposition, Mississippi is the only state still awaiting conditional approval.

The U.S. Health and Human Services Department has delayed a decision until this month, hoping he and Chaney can work things out. That's unlikely, based on their comments.

Bryant says he despises the federal law because it will drive up costs and impinge on individual liberty. He fears the exchange will drive too many people onto Medicaid, including those now eligible but not enrolled. He also opposes expanding Medicaid, though some GOP lawmakers are open to it because Washington would pay the full cost of expansion for the first three years and no less than 90% after that.

"This is a bait-and-switch," he says, because states will get stuck with higher costs. One reason: Whether the state or federal government runs the exchange, it will direct people who qualify to Medicaid. This will occur in all states, even those that don't expand Medicaid eligibility.

Chaney had opposed the law, but now he says having the state run the exchange is the best way to make sure it's designed for the needs of Mississippi residents. "I have known the governor for many years," Chaney says. "The governor and I are friends and reasonable people can disagree and still be friends. But I think, on this issue, a state-based exchange is the right thing to do."

Chaney notes Bryant endorsed an insurance exchange while he was lieutenant governor in 2009, when then-governor Haley Barbour sought to create one even before the health law passed. Bryant says he favored an exchange but without government subsidies or a link to Medicaid.

On Friday, the insurance commissioner got a boost when state Attorney General Jim Hood, a Democrat, issued an advisory opinion declaring that Chaney has the legal authority to pursue a state exchange.

Using millions of dollars in U.S. grants, Chaney has put Mississippi out front in developing the marketplace, named "One, Mississippi."

An early version of the website is operational and a marketing campaign has begun.

Bryant worries about setting up a huge bureaucracy with dozens of new state employees and millions in costs for the state. But so far, all the work is being outsourced and there are no plans to use state money.

"Not a penny of state funding will flow through here" under current plans, says Lanny Craft, executive director of the state's high-risk insurance pool, an independent non-profit created by the state that houses the exchange. After federal start-up grants run out in 2014, the administrative costs will likely be covered by a fee paid by insurance companies selling in the exchange.

The state has hired getinsured.com, a Silicon Valley-based company that runs a national private online insurance exchange, to build its marketplace. The company plans to open a call center in Jackson to handle consumer questions.

If the federal government backs the state exchange, Bryant hasn't ruled out taking other steps to impede its operation. For example, the governor controls a state board that must approve state contracts, such as those needed to outsource work for the exchange.

Asked whether he would also try to block a federal-run marketplace, he says: "Certainly I will."

Kaiser Health News is an editorially independent program of the Henry J. Kaiser Family Foundation, a non-profit, non-partisan health policy research and communication organization not affiliated with Kaiser Permanente.